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Rebate or Re-bait?

by: Angela Castellanos

Electronic stores and cell phone providers love them. Consumers sometimes purchase items only because of them. Pay $200 now and get $100 back later? How could anyone resist? The shopping rebate has become a staple of computer, stereo, cell phone, and electronic shopping.

A late 2004 survey conducted by the NPD Group, an organization that provides global retail and consumer information, shows that almost one-third of consumers surveyed purchased a technology product that offered a rebate.

Shopping rebates promise consumers discounts in a variety of ways: the instant-cash rebate allows shoppers to save money instantly at the register, while the Internet rebate encourages shoppers to go online and fill out the rebate form. The mail-in rebate requires consumers to pay the full price of the item, fill out a few forms, mail them in, and await the rebate check.

However, with the most popular rebate, the mail-in rebate, the savings may never come at all. According to an article by Stephanie Moore on ConsumerAffairs.com, rebate redemption rates never reach 100 percent, and more than $500 million in rebates go unfulfilled every year.

Read the Fine Print

Mike Schiano, author of "Spend Your Way to Wealth" and host of the nationally syndicated daily "Money Minute with Mike," blames some of the unfulfilled rebates on the fine print that comes with most rebates. If a manufacturer asks for a 3" x 5" card filled with information and the customer sends in a 4" x 6" card, the manufacturer very well could deny that customer the rebate, Schiano said.

For the mail-in rebate, consumers usually must include the original sales receipt, UPC code, rebate slip, and the customer’s name, address and telephone number, among other things. Sometimes consumers have within 30 days after the day of purchase to send the claim in to the manufacturer or retailer, according to the Federal Trade Commission (FTC). Not only do retailers under-publicize the fine print, but, often times, they don’t even fulfill these rebate claims themselves.

"A major part of the problem, when there is one, is that retailers generally use fulfillment companies to process the rebates for them," Schiano said.

Retailers and manufacturers hire fulfillment companies to redeem the thousands of rebates they promise each year. If the fulfillment company is not well run, the consumer may have a hard time getting the promised rebate.

A Long Wait

According to ConsumerAffairs.com, the FTC has cracked down on several small fulfillment companies who take advantage of frustrated customers that give up on the elusive rebate. Some companies made consumers wait up to six months to receive the discount. However, the responsibility, Schiano said, should still lie with the retailer who employed the incompetent fulfillment house.

"There are many instances where people have done exactly what was required, and the companies handling the rebates have dropped the ball and not sent the money back to the consumer as required," Schiano said.

To avoid this trouble and to keep consumers happy, some retailers are beginning to break away from the traditional mail-in rebate and turn to Internet submission of rebate information. In January 2006, Best Buy announced that it would begin the next phase of its two-year plan to eliminate mail-in rebates from its stores altogether by providing instant-cash rebates on notebook computers and introducing Internet-based rebate submission. However, not all companies are as eager to eliminate mail-in rebates as Best Buy.

"Most still require that the information be mailed into the fulfillment house, which increases the chance that the consumer will not bother following through," Schiano said.

Consumer negligence results in larger profits for the retailers and manufacturers who take advantage of the hassle of the mail-in rebate. They accumulate the unredeemed discounts from the customers who forget to include the proofs of purchase or who unknowingly throw the rebate form out with the trash.

"The fact is most people will not go to the trouble, as little as it is, to complete the rebate offer as required," Schiano said. "Some offers are more complicated than others but I’ve never seen one so daunting that I could not complete it in a few minutes."

Here are some basic guidelines, according to Schiano, for getting the promised rebate:

1. Before making a purchase, make sure you are buying the product that qualifies for the rebate. Often, only a certain model will qualify. If you upgrade to a slightly different model, you may lose the rebate.2. Get all needed paperwork for the rebate before you leave the store.3. Follow rebate directions exactly.4. Note the amount of time the company says it will take to process the rebate and set a reminder.5. If the rebate is not received within the allotted time frame, complain to the fulfillment house and the retailer and/or manufacturer. The retailer is ultimately responsible for delivering the rebate check.

The government also encourages consumers who do not receive their rebates to file a complaint with the Federal Trade Commission or a local Better Business Bureau.